As someone who takes the planetary disruptions seriously I'm considering installing solar panels. I would like to do it in a manner that also makes Financial sense, including lost opportunity cost of money invested in the project. How would you approach the question. If possible, we will never move again.
That sounds rational for someone who is already invested and diversified. What about for someone who has been sitting on piles of depreciating cash like your wife was and is now convinced, thanks to you!, to deploy and maximize saving/investment? I am convinced to deploy in low cost diversified global equity index ETF. But what about bonds? Should I deploye now, or rellocate after the “short to medium term pain” as you call it?
Hey Ali, that's great you are ready to start putting that money to work. In terms of the "When" if you are ready to invest there's no time like the present. Like with stocks I avoid trying to time the market with bonds. If I had a pile of cash that was earmarked to be invested, I would invest it all right away in a diversified portfolio. Even though I don't time the market, I would say that after such a brutal year for both stocks and bonds, if you are investing money today that you don't need for a decade plus, today looks much more attractive than a year ago.
Here are two articles/chapters from my book that you might find interesting when investing during times like this.
Much appreciated, Ben. That’s really helpful as always. Yes, I have read both of your books and they are the reason I am taking the investing plunge. My only regret is not starting much earlier in life. Personal finance really ought to be taught in school.
I am rational convert! I have decided on an 80/20 stock/bond split to balance my almost bond-like paycheck. But my only hesitation has been on whether to allocate to bonds now or once the Fed starts signaling a stop to rate rises which is currently negatively impacting outstanding bonds (I know this is market timing!)
As someone who takes the planetary disruptions seriously I'm considering installing solar panels. I would like to do it in a manner that also makes Financial sense, including lost opportunity cost of money invested in the project. How would you approach the question. If possible, we will never move again.
Hey K,
Love this question. I'm going to do some research into this issue and tackle it in a future mail bag post.
Stay tuned!
That sounds rational for someone who is already invested and diversified. What about for someone who has been sitting on piles of depreciating cash like your wife was and is now convinced, thanks to you!, to deploy and maximize saving/investment? I am convinced to deploy in low cost diversified global equity index ETF. But what about bonds? Should I deploye now, or rellocate after the “short to medium term pain” as you call it?
Hey Ali, that's great you are ready to start putting that money to work. In terms of the "When" if you are ready to invest there's no time like the present. Like with stocks I avoid trying to time the market with bonds. If I had a pile of cash that was earmarked to be invested, I would invest it all right away in a diversified portfolio. Even though I don't time the market, I would say that after such a brutal year for both stocks and bonds, if you are investing money today that you don't need for a decade plus, today looks much more attractive than a year ago.
Here are two articles/chapters from my book that you might find interesting when investing during times like this.
Stock Market Crashes Are Always Different But The Result Never Changes: https://open.substack.com/pub/benlefort/p/stock-market-crashes-are-always-different?r=r7ti9&utm_campaign=post&utm_medium=web
Extended Bear Markets Is Where Future Wealth Is Created: "https://open.substack.com/pub/benlefort/p/extended-bear-markets-is-where-future?r=r7ti9&utm_campaign=post&utm_medium=web
And although this chapter was about Crypto, it touches a lot on why bonds have historically been a good diversifying asset to stocks (2022 excluded): https://open.substack.com/pub/benlefort/p/does-crypto-have-a-place-in-a-portfolio?r=r7ti9&utm_campaign=post&utm_medium=web
In terms of how much in stocks and bonds, I do touch on that a bit in my book. It comes down largely to how secure your job is, how long you're investing, how much cash you have on hand and your risk tolerance. Vanguard has a handy tool to help you start thinking about your risk tolerance: https://retirementplans.vanguard.com/VGApp/pe/PubQuizActivity?FW_Event=IQViewEvt&ANTI_CSRF_TOKEN=HW38-KG2J-2TVC-VFK6-I9WA-QMWY-GLY6
Hope this is somewhat helpful, please feel free to ask as many follow ups as you like.
Thanks,
Ben
Much appreciated, Ben. That’s really helpful as always. Yes, I have read both of your books and they are the reason I am taking the investing plunge. My only regret is not starting much earlier in life. Personal finance really ought to be taught in school.
I am rational convert! I have decided on an 80/20 stock/bond split to balance my almost bond-like paycheck. But my only hesitation has been on whether to allocate to bonds now or once the Fed starts signaling a stop to rate rises which is currently negatively impacting outstanding bonds (I know this is market timing!)